Title IX, SEC. 9012. DETERMINATION OF AFDC PER CAPITA PREMIUM AMOUNT FOR 
REGIONAL ALLIANCES. 
      (a) In General. For each regional alliance in a State for each year, the 
    Secretary shall determine an AFDC per capita premium amount in accordance 
    with this section. Such amount is equal to 

        (1) the per capita State medicaid expenditures for the comprehensive 
      benefit package for AFDC recipients for the State for the year (as 
      determined under subsection (b)), multiplied by 

        (2) the adjustment factor (determined under section 9015) for the year 
      for the regional alliance. 

      (b) Per Capita State Medicaid Expenditures Defined. The ``per capita 
    State medicaid expenditures for the comprehensive benefit package for AFDC 
    recipients'' for a State for a year is equal to the base per capita 
    expenditures (described in subsection (c)), updated to the year involved 
    under subsection (d)). 

      (c) Base Per Capita Expenditures. The ``base per capita expenditures'' 
    described in this subsection, for a State for a year, is 

        (1) the baseline medicaid expenditures (as defined in subsection (e)) 
      for the State, divided by 

        (2) the number of AFDC recipients enrolled in the State medicaid plan 
      in fiscal year 1993, as determined under section 9014(a). 

      (d) Updating. 

        (1) Initial update through year before first year. 

          (A) In general. The Secretary shall update the base per capita 
        expenditures described in subsection (c) for each State from fiscal 
        year 1993 through the year before first year, by the applicable 
        percentage specified in paragraph (2). 

          (B) Applicable percentage. For purposes of paragraph (1), the 
        applicable percentage specified in this paragraph, in the case of a 
        State in which the first year is 

            (i) 1996 is 32.2 percent, 

            (ii) 1997 is 46.6 percent, or 

            (iii) 1998 is 62.1 percent. 

          (C) Adjustment authorized to take into account cash flow variations. 
        In determining the update under paragraph (1), the Secretary may 
        provide for an adjustment in a manner similar to the adjustment 
        permitted under section 9002(b)(3). 

        (2) Update for subsequent years. For each State for the first year and 
      for each year after the first year, the Board shall update the base per 
      capita expenditures described in subsection (c) (as previously updated 
      under this subsection) by a factor equal to 1 plus the general health 
      care inflation factor (as defined in section 6001(a)(3)) for the year. 

      (e) Determination of Baseline Medicaid Expenditures. 

        (1) In general. For purposes of subsection (c)(1), the ``baseline 
      medicaid expenditures'' for a State is the gross amount of payments under 
      the State medicaid plan with respect to medical assistance furnished, for 
      items and services included in the comprehensive benefit package, for 
      AFDC recipients for calendar quarters in fiscal year 1993, but does not 
      include such expenditures for which no Federal financial participation is 
      provided under such plan. 

        (2) Disproportionate share payments not included. In applying paragraph 
      (1), payments made under section 1923 of the Social Security Act shall 
      not be counted in the gross amount of payments. 

        (3) Treatment of disallowances. The amount determined under this 
      subsection shall take into account amounts (or an estimate of amounts) 
      disallowed. 

      (f) Application to Particular Items and Services in Comprehensive Benefit 
    Package. For purposes of this section, in determining the per capita State 
    medicaid expenditures for a category of items and services (within the 
    comprehensive benefit package) furnished in a State, there shall be counted 
    only that proportion of such expenditures (determined only with respect to 
    medical assistance furnished to AFDC recipients) that were attributable to 
    items and services included in the comprehensive benefit package (taking 
    into account any limitation on amount, duration, or scope of items and 
    services included in such package).